ECJ okays resale of softwares.

European court of Justice in its ruling on 3rd July 2012 ruled that trading of used software licenses is legal and that the author of that software cannot oppose such resale. This judgment makes  exhaustion doctrine applicable for "software licenses".

Oracle Corp, the software giant, lost itschallenge seeking to prevent the German company Used soft from selling computer soft wares and licenses no longer used by the original owner.

Oracle develops and distributes software through internet which can be downloaded freely from oracle's website.After downloading the software,  user has to obtain a user- right which is in the form of a license agreement, which grants him a right to store the program permanently in his server and also to allow access to 25 users. User is even allowed to download any updates or any correction for faults of the program from Oracle's website. But  license agreement has a "non - transferable" clause which restricts the user from transferring it to others for an unlimited period.

Used soft  markets already marketed and licensed  software of Oracle. Oracle made a  complaint against Used Soft in German Courts which requested the advice of ECJ on the issue.

ECJ was called to examine the exhaustion doctrine under Directive 2009/24/EC of the European parliament and the council of 23rd April 2009 on the legal protection of Computer programs. Article 4 of the said Directive reads as follows: 

"The first sale in the community of a copy of a program by the right holder or with his consent shall exhaust the distribution right within the community with exception to control further rental of the copy"

ECJ while interpreting this provision in the current case said that in case a copyright holder enters into a license agreement, in return for a payment of a fee, then such an agreement would amount to sale of that copy and hence right holder exhausts his rights upon such copy. Thus a "non- transferable " clause in a license agreement can no longer be valid within EU.

Further Court did place some limits on resell , firstly in case of  multiuser license it is not permissible to split up the license and sell them separately and secondly after reselling the software the original licensee shall make his own copy unusable.

Though this interpretation protection protects the interests of the consumers, it would be a blow to the business patterns of software giants who invariably inserts such clauses into licensing agreements. Further the idea that the original user shall make his own copy unusable appears to an inoperable idea.

Full Judgement available here

15% increase in the number of fake products seized at EU borders in 2011

According to the European Commission’s annual report on customs actions to enforce intellectual property rights (IPR), released on 24^th July, 2012, over 115 million fake products (dealing with more than 91,000 cases) were seized by the Customs officials stationed along the European Union’s external borders in 2011, which was estimated to be 15% more than articles seized in 2010 (dealing with about 80,000 cases, seizing about 103 million articles).

China was at the top of the list of source countries for counterfeit goods last year. Also several EU member states have come into picture as countries of origin for different categories of fake products.

Given the increase in the quality and diversity of counterfeit products, the European Commission has recognised the industry’s important role in tipping off officials about IPR infringements.

Find full Report here 

Decision on European Unitary Patent Law Postponed

The European Parliament (EP) has postponed the recent vote on the new “Unitary Patent Law” which was drafted jointly with the European council. Last Friday the European Council comprising of 27 states of European Union (EU) reached an agreement to create a single patent system for 25 states of the Union under a single patent court.

The proposed European Unitary Patent also known as the EU Patent, if passed, enables any individual or company to file single patent application with the European Patent Office for getting a unitary patent throughout European Union. The proposed patent system is intended to remove the difficulties of the existing European Patent Convention where patents are granted as a “bundle of nationally enforceable rights”. Unitary Patents is considered to reduce costs of patent application and to boost innovation by providing an affordable patent in Europe with a single specialized jurisdiction.

The proposed regulation provides for establishing a specialized court for dealing with Patent issues. Thus an infringement case can be filed in any of the three courts established in Paris, London and Munich subject to their specializations. Article 6 to 8 of the Regulation passed in last December, on the basis of an agreement between the Council and EP, allows an appeal from specialized patent courts to the European Court of Justice (ECJ) in direct and indirect patent infringement cases.

But the new agreement reached by the Council on Friday deleted these clauses, thereby giving exclusive jurisdiction to the newly established Patent court and its clusters over patent infringement cases. Even the European Court of Justice will not have jurisdiction over matters concerning patent infringements. This limitation towards jurisdiction of the ECJ has led to differences among the members of European Parliament.

Many members of the EP consider it a “Big mistake” to exclude ECJ from the unitary patent system though on the contrary, the representative of UK consider this as reasonable. According to them “the jurisdiction of the Court of Justice leads to anomalous consequences”. These debates on the new issue on jurisdiction of ECJ have forced the EP to postpone its votes on the regulation for further deliberation.